Serbia exclusive: RES project has a budget for financing; citizens pay RES tax thru their electricity bills

Published on 2. December 2014., News Serbia Energy

Citizens of Serbia all finance the construction of hydro power plants and wind parks- citizens pay the fee for the “green” energy through the electricity bill. Experts believes that the current feed-in tariffs in Serbia could be considered as satisfactory in terms of project feasibility. Most citizens of Serbia are not aware that they also pay the fee to investors of renewable energy sources (RES) through the electricity bill every month. This practically means that we pay for the construction of the wind farms, solar power plants, and small hydro power plants every month.

Although it is not the only fee paid by the citizens, the new look of the bill from February this year has raised the question of the RES fee significance. Namely, this fee has arisen from the Decree on the amount of special fee for incentive, Decree on Incentive Measures for Privileged Energy Producers and Decree on methods of calculation and allocation of funds collected for purpose of incentive remuneration for privileged power producers. It is a compensation for subsidized electricity from renewable energy sources in the amount of 0.081RSD per kilowatt-hour. On average, natural persons monthly pay from 16 to 66 RSD, depending on the consumption. All the money from these fees goes into a special account from which the electricity from renewable energy sources is paid, purchased from the privileged producers at subsidized prices (so-called “feed-in” tariffs).

As it is stated by the “Electric Power Industry of Serbia” (EPS) the electricity sales plan for 2014, based on the fee for incentive of the privileged producers, about 2.2 billion RSD should be collected. It is explained in EPS that the final amount of the funds collected by this method depends on the percentage of charge. When we asked how much could bills increase in the future, according to the increase of the energy amount coming from RES, it was stated in EPS that the Ministry of Energy make decisions on this issue each December, according to the provisions relating to the privileged producers of renewable energy resources.

Legitimate or not

Although the citizens monthly allocate the money for this matter, many people have asked themselves if this is a legitimate move of EPS? Has anyone asked the citizens whether they want to pay for the subsidized kilowatt-hours to the investors which have decided on their own and seen the profit in the investments and production of those kilowatt-hours?

Experts from the energetic field say that local legislation has taken over the experience of the surrounding countries.

As they say, the practice of most countries is that the “green kilowatt-hours are paid by the end customers, i.e. citizens. This fee has been paid by EPS so far because it has been cheaper than printing the receipts due to symbolic amount of kilowatt-hours. However, since it will be more “green energy” on the network in the future, it has been decided that it should be paid by all the consumers. Informed people say that the decision, that this cost can be seen on every bill, is good, because the citizens should know what they pay for and how much.

In developed countries, where the “green energy” is shown on the bills, there is a so-called mix. Thus, it knows exactly how much electricity has been produced from the water, wind, sun and it is all paid by end consumers.

Reservoir fund for RES

By the decision that all the citizens should pay this fee, the Ministry of Mining and Energy has created a “reservoir” fund whose amount increases with the increase of electricity production from the renewable energy sources, and the assessments are that by 2020 for the electricity from RES 400 RSD in average will be paid per bill.

In this way, the Ministry of Mining and Energy has regulated the incitement of energy production from renewable energy sources which is a strategic and national goal. Incitement prices for purchasing the electricity produced from RES are one of the ways for Serbia to achieve the goal of increasing the share of consumption of the energy from renewable energy sources from 21.2% to 27% by 2020.

Tariffs

Government of Serbia adopted in January last year the regulation on stimulus (subsidy) prices for the purchase of electricity from the renewable energy sources. The main novelty is that the amount of subsidies or so-called feed-in tariffs is annually adjusted to the amount of the inflation in the Eurozone. With the new regulation the price for purchase of electricity from wind power plants has been reduced from 9.5 to 9.2 cents per kilowatt hour and increased the quotas for purchase from 450 to 500 megawatts.

By the end of 2015, the electricity purchase will be subsidized from wind power plants with the total power up to 300 megawatts, and that amount will be increase by additional 200 megawatts of the wind power plant that will be constructed by 2020.

Electricity from solar power plants should be purchased at price ranging from 16.25 to 19.77 cents, depending on the power of the plant, instead of the previous 23 cents.

The 12 years incentive period is included in this regulation. Representatives of the company “Fortuna”, which, in March of this year, opened a solar power plant near Leskovac, say that for them, as the investors, the most important is that the feed-in tariffs are predictable, that is, their value will not change in the future, so they know what to expect.

Experts believes that the current feed-in tariffs in Serbia could be considered as satisfactory in terms of project feasibility.

Although prior to entering into force of the Decree on Incentive Measures for Privileged Power Producers from 2013, the values for feed-in tariffs were higher on average from 5% to 25%, but they were also fixed without the possibility of alignment with the market conditions. According to the existing Decree, the annual corrections of the feed-in tariff are adjusted by the inflation rate in the Eurozone. Thus, during the 12 years period of the status of the privileged energy producer, the corrections of the purchase price should rise, judging the current trends. With the current feed-in tariffs, the projects that have been optimized usually have a payback period between 8 and 10 years. Looking at the region, feed-in tariffs are mostly consistent. Rarely will happen again the situation from the beginning of the implementation of the subsidized tariffs, when some countries, even the members of the EU, had to retroactively reduce the feed-in tariffs due to unsustainability of the system.

It has been proposed to introduce, with the new decree, even the feed-in tariffs for all types of biogases, as well as the purchase of the electricity generated from the solar collectors mounted on the buildings to encourage citizens to make more use of this energy source.

Energy from the solar collectors on the facilities, for example for the constructions with the installed power of 30 kilowatts, would be purchased at the price of 20.66 cents per kilowatt hour.

Regulation on feed-in tariffs envisages the subsidy prices for the purchase of the energy generated in small hydro power, from the geothermal energy and biomass.